Russia’s Exit May Spur Rush for African Gold to Copper

Bloomberg | Russia's invasion of Ukraine appears to be terrible news for Africa, as rising grain, fertilizer, and oil costs will raise inflation.

However, because Russia is excluded from the majority of global trade, there is potential for the continent to supply the metals that the world requires, both now and in the future.

In the short term, the rise in commodity prices, which includes everything from palladium and gold to nickel and copper, would help mining-dependent countries like Zimbabwe and Namibia balance their budgets. South Africa's $12 billion tax windfall, which was fueled by rising commodity prices, could be extended in the current budget year.

Palladium has risen by a fifth since Russia was sanctioned, gold is around $2,000 an ounce, while copper and nickel have reached new highs.

If Russia's share of output is locked out of the market for an extended period of time, mines will be pressed to produce at maximum capacity, and proposed expansions will be approved.

Zambia and the Democratic Republic of Congo would be first in line, with a number of copper prospects ripe for investment. First Quantum will decide soon whether to invest $1 billion in expanding the Kansanshi mine and developing the Enterprise nickel complex. Mines owned by Ivanhoe and China Molybdenum in Congo could benefit.

South Africa, on the other hand, maybe the largest winner. Russia supplies roughly 38% of the world's palladium, with Africa accounting for 39% of the metal used in auto-catalysts to reduce emissions from automobiles.

According to Callee Davis, an economist at Oxford Economics Africa, "African exporters could benefit from new market opportunities." The breakdown of trade between Russia and the sanctioned countries "creates a hole."